Bank charges on estates cost customers thousands
Did a bank write your Will for you? Beware of hidden bank charges on estates.
Up to 1.5 million people in the UK may have thousands of pounds in charges levied on their estates after they die after using cheap or free Will writing services from their banks. Bank charges on estates are common in Wills that they either wrote cheaply or for free for their customers as a ‘perk’ for signing up to other services.
These Wills often appointed the bank itself as the executors of the estate and gave the banks the power to charge up to 2.5% in legal fees to conduct the administration.
On an estate worth £250,000 these fees could amount to £6,250 plus VAT (£7,500).
This would be despite the administration being relatively straightforward if the estate simply consisted of a property and a few savings accounts.
When customers signed up for these schemes they may not have understood the implication of making the banks the executors and the percentage charge may have appeared modest, especially before the boom in property prices.
Banks often offered Will writing services as a perk when customers signed up for insurance or fee-paying current accounts. They would then be visited at home by bank staff or lawyers to prepare their Wills for them.
An estimated 1.5 million Wills have been written by banks over the past 20 years. Banks are still offering Will-writing services. Natwest and sister bank RBS charge 2.5%, plus a £1,500 charge up to a maximum total fee of £15,000. Lloyds charge 1.5% on the first £1 million of wealth.
What can you do if your Will was written by a bank?
Bank charges on estates can be avoided. If you currently have a Will that was drawn up by a bank and appoints them as executors then you should consider either making a new Will or drafting a codicil (a supplementary page to the Will) to change the executors.
If you have recently suffered a bereavement and discovered that a bank is the executor of a Will then it is possible to ask them to renounce their role. Many banks (or other professional organisations) will accept a family’s request for them to renounce their role as executors, although there may still be a charge payable for them to prepare the Deed of Renunciation.
Wheelers Solicitors believe charging a percentage of the estate is unfair.
At Wheelers Solicitors we believe it is unfair to charge a percentage of an estate to cover the administration costs of Probate. This simply penalises people depending on the value of their estates rather than reflecting the true costs of the administration.
It is not possible to charge an ‘off the shelf’ price for Probate administration. Every estate is individual and they can vary dramatically in complexity. Instead, Wheelers Solicitors charge an hourly rate for Probate administration so that the costs accurately reflect the work completed.
Currently, Wheelers Solicitors charge £180 per hour (plus VAT) for Probate administration. This is broken down to 1/10th of an hour for letters written, 1/20th of an hour for letters received, emails and telephone calls and per minute for time spent in attendance and on preparation.
A typical estate will take between 7-10 hours of chargeable time (£1,512 – £2,160 inclusive of VAT). More complex estates (where there are many assets and liabilities to be dealt with or where family negotiations are difficult) can take longer.